SolarCity teams with Tesla on storing energy

Not content to blanket rooftops with solar panels, SolarCity is jumping into the energy storage market as well.

And the company is teaming up with corporate cousin Tesla Motors to do it.

SolarCity on Thursday will unveil DemandLogic, a new energy management and storage service for businesses. The service will use a combination of solar panels, big batteries and advanced software to cut utility bills for clients. Those clients will pay for the service on a monthly basis, rather than buying the gear.

“We see storage as a very integral and necessary part of solar,” said Eric Carlson, SolarCity’s senior director of grid integration. The solar leasing company, he said, is also testing a storage service for homes but isn’t ready to roll it out.

DemandLogic focuses on reducing a specific part of a business’s utility bills — demand charges. Businesses not only pay for the amount of electricity they use from the grid, they also pay a charge based on their peak electricity demand during the month, even if that peak is very brief.

So DemandLogic uses solar panels and batteries to lower the peak. If a business’s electricity demand spikes at one particular part of the day, DemandLogic will draw more electricity from the panels and batteries and less from the grid. The business will still be using the same amount of electricity as it would have without SolarCity’s system, but less of that power will come from the grid. As a result, the demand charges on the business’s monthly utility bill will be lower.

DemandLogic can also keep businesses running in case of a blackout.

SolarCity isn’t the only company pursuing this idea. Stem, a startup based in Millbrae, unveiled a very similar storage service in October, minus the solar panels. But Jonathan Bass, SolarCity’s director of communications, said his company’s experience in solar, combined with what he called the “best battery technology in the world” will be hard to top.

“I’m sure other people will try to compete in this business, but we feel pretty good about our position,” he said.

If the service takes off, it will increase demand for Tesla’s batteries. The electric car company, based in Palo Alto, is already considering building a new factory to make batteries for its Model S sedan as well as its next car, the Model X.